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Prospects for the retail sector in Azerbaijan

1/15/2019

Retail has become one of the most dynamic areas of the Azerbaijani economy for 10 years. Its average growth rate is 12 percent per year. Foreign companies invest in retail development due to the attractiveness of the Azerbaijani market. Now it is the largest sector of the non-oil economy after construction. Its condition reflects the living standard of Azerbaijanis.

The rapid development of trade infrastructure creates favorable conditions for new retail chains. The trend of recent years is the emergence of supermarkets and hypermarkets, which replace kiosks and small shops.

“Until now, the shopping process in Azerbaijan was not as convenient as in the modern supermarkets. People had to visit several shops or markets to buy all necessary goods. It took a lot of time. New stores are organized other way: quality products at a competitive price can be found under one roof. Supermarkets have a modern design and become popular places for spending time,” says Emil Musayev, Head of the Sales Department of the company Penkių kontinentų bankinės technologijos (BS/2), owned by the Penki kontinentai group.

According to him, Azerbaijani retailers revised the concept of creating stores. They upgrade the space in accordance with the latest global trends. Retailers increase the area of the sales area and the number of cash register units, purchase specialized equipment, and expand storage facilities. Particular attention is paid to the high culture of customer service and time costs in making purchases. A wide range of products and contact with customers are the main tasks of retail chains. According to marketing research, customers want various additional services in stores, so supermarkets become a place not only for shopping, but also for recreation. There are cafes and restaurants, playgrounds for children, cinema, pharmacies or branches of various banks on the territory of the supermarkets etc.

80-90 percent of trade in France and Germany accounts to supermarkets and hypermarkets. This figure is much lower in Azerbaijan, but the trend of recent years indicates a development in this direction. According to the State Statistics Committee data for January-September 2018, 16.9 percent of consumer goods were sold by retailers, 50.8 percent by private entrepreneurs, and 32.3 percent in the markets.

The cost of products sold in Azerbaijan through retail chains in 9 months of 2018 amounted to 26.2 billion manat, which is 2.7 percent more than the same period in 2017. The growth of consumer costs is associated with an improvement of living standards, an increase in purchasing power and a process of urbanization.

“Local companies in the competition for customers try to change the country's retail and bring innovations there. ARAZ opened a chain of low-cost shops with a wide range of cheap goods. The rapidly developing chain Bravo introduced a special concept for the design of stores: lighting, shelving and display of goods. The novelty of the RAHAT, which has been operating in the field of trade and retail sales almost for 10 years, is premium stores. We do not have such in Lithuania. The range of premium stores consists of exclusive and high-priced goods,” says the Head of the Sales Department of a company that supplies specialized equipment to retail chains in Azerbaijan.

Bravo, Fresco, RAHAT and SPAR use Bizerba technology solutions, for which BSKOM, a BS/2 subsidiary in Azerbaijan, has been responsible for over the years. Bizerba and BS/2 signed a cooperation agreement in 2014 and laid the foundation for the beginning of the development of a new retail era in this country.

BS/2 supplies various equipment for selling, weighing, cutting, checking, processing and operating. The company offers its partners customized technology and software solutions to optimize costs and concentrate on their core business. Innovative BS/2 solutions automate the operation of retail chains, speed up the staff work, reduce queues, and thus contribute to customer loyalty.

Azerbaijan is not the only market where BS/2 operates. The company implements numerous projects in Uzbekistan, Georgia and Belorussia, which allows it to use the experience of other countries at the local market.

“If we talk about the prospects for the development of trade chain, then Azerbaijan has a great potential. Its population reaches 9 million people. This is three times more than the number of Lithuanian residents. Retail trade of Azerbaijan is progressing rapidly. Some local innovations would be a novelty even for citizens of our country,” concluded Emil Musayev.